Thoughts on how to eat an elephant
‘How do you eat an elephant? − Bite by bite,’ said my porter to an over-zealous teenager at the base of Kilimanjaro. It’s a powerful African metaphor providing perspective in my current role of aiding small and medium-sized entities (SMEs) in South Africa.
In a nation often grappling with sluggish economic growth and daunting prospects, chartered accountants possess a toolkit and insights that SMEs desperately need.
Research underscores the global SME challenge: over 50% of new businesses fail within their first five years. South Africa experiences a higher rate of 70% to 80% failure in the initial year. A primary cause for this, as studies suggest, is the lack of professional guidance and expertise for SMEs.
Enter us – with immense potential to enact change. We have the skills, training and knowledge to help South Africa eat its own ‘elephant’ − all we need is desire and passion. After all, as another South African animal, the springbok, reminds us: we are #StrongerTogether.
Why SMEs?
They constitute the backbone of a thriving economy, embodying innovation, employment, and economic dynamism. They are the economy’s momentum.
The World Bank notes that SMEs account for about 90% of businesses and over 50% of global employment.
In emerging economies, formal SMEs contribute up to 40% of the national income (GDP). In South Africa, SMEs currently comprise 32% of the local business landscape’s income. This provides enormous potential and opportunities. We, as CAs, can and must be the ‘guardrails’ for the next generation of entrepreneurs.
SMEs are agile, innovative, and adept at meeting market demands. They frequently lead the way in introducing new products and services, fostering competition, and driving larger corporations to innovate. Moreover, SMEs play a pivotal role in job creation, providing employment for a significant portion of the workforce. It is estimated SMEs provide 30% of South African employment.
In a slow-growth economy, the role of SMEs becomes even more critical. They possess the adaptability to respond swiftly to changing market conditions, injecting fresh energy into stagnant sectors. They are often located in rural areas, further aiding economic development. During economic downturns, while larger corporations may face challenges leading to downsizing, SMEs can step in to create new employment opportunities, acting as stabilisers.
How do we get more SMEs to succeed?
This is where CAs must step up and step in. Finance and accounting professionals are integral partners in SME success. Their expertise transcends traditional financial management, encompassing financial advisory, risk planning, compliance and regulation management, technology adoption, access to finance and funding, tax optimisation, and strategic planning.
In essence, CAs serve as invaluable partners offering practical, actionable strategies that drive SME growth and profitability. By leveraging the knowledge and skills of CAs, SMEs can navigate challenging economic environments with confidence, ensuring their continued contribution to economic vitality and resilience.
In conclusion, research consistently highlights that accountants are the preferred advisors to SMEs worldwide. Coupled with our toolkit as CAs and the pivotal role of SMEs in our economy, we can tackle the ‘elephant’ one SME at a time. Together, we serve as catalysts for economic growth, innovation, and job creation. We are stronger together.
SMEs may appear small but their potential for exponential growth and overall impact on unemployment and economic growth, like elephants, is large.
Disclaimer: Eating elephants is not my thing, but it did get me to the summit! Getting SMEs to the summit, on the other hand, is my THING.
References are available on request.
